Tax Returns Explained

Tax Returns Explained

Businesses must complete an annual tax return, which gives details of their taxable income, and any capital gains if appropriate. It also allows them to claim tax allowances and tax reliefs should they be eligible.

A tax return is essentially your way of declaring your income to HM Revenue and Customs (HMRC), so they can let you know how much tax is due. Whether you are a sole-trader, partnership or limited company, you must complete some form of return.

Like it or not, they play a huge part in the running of any business. Not only do tax returns involve a lot of work and organisation, but they can also be incredibly time-consuming and keep you away from valuable business tasks despite being an annual requirement.

Thankfully, accountants exist to help you with issues just like these. Unless your finances are completely clear, in order and straightforward with a complete bookkeeping record, you may want to seek help.

The online accountants who we feature all use software to make working out tax much easier and show you real-time data and calculations, due dates and time periods. This is compliant with Making Tax Digital obligations which came into force in 2019.

When Is A Tax Return Due?

A tax year runs from 6 April one year to 5 April the next. The tax return will take into account all of the income between these dates.

The return deadline is usually 31 January following the end of the tax year for online forms, and 1 October following the end of the tax year for paper versions.

How An Accountant Can Assist With Tax Returns

Making your life a lot easier and hassle-free is a huge reason why outsourcing tax return assistance using an online accountant is a great idea, but it isn’t the only reason:

  • Registration: If you did not submit a tax return last year, you will have to register as eligible. This can take a little while, but it could be done on your behalf
  • Peace Of Mind: Off-handing this work to someone who knows what they are doing will allow you to rest easy in the knowledge everything will be correct. HMRC can issue fines if you provide false or incorrect information which leads you to pay the wrong amount of tax
  • Correct Accounts: Tax returns are calculated from your annual accounts, so first thing first – these have to be in order. An accountant will make sure all info is correct, using online software and double-checking data
  • Submit To HMRC: The submission process could take time away from your business. This will all be done on your behalf, using online software which gets everything calculated and sent directly to HMRC at the click of a button as with MTD guidelines
  • Timing: Vitally, the submission will be before the deadline. Many business owners fall into the trap of leaving accounts to the last minute, and being overwhelmed. Late payments can result in heavy fines, so you’ll want to avoid this
  • Claims And Savings: Tax returns involve parting with a lot of money, but rebates and savings can be made in plenty of areas. You could easily oversee areas where you can make savings, but an accountant won’t. They can also make recommendations on processes which could save you money before you part with it
  • Acting As A Middleman: HMRC can occasionally randomly investigate tax returns to ensure everything is in order. Not only could you be less likely to be chosen if you’ve used an accountant, but they can deal with any issues or correspondence

Can I Submit My Own Tax Return?

Yes. It could save you money on accountancy fees, which is great if you are a small business or just in your first year. Software makes the process much easier if you don’t know where even to start, and it will all be sent to HMRC automatically when due.

However, if you hire an accountant, they can provide you with the best software to use for your business. They can check over the accounts and bookkeeping before any big submissions and help you if you encounter any problems, and their help is available as and when you need it.

No matter how easy software can make things, two pairs of eyes are better than one. They will go through all the sums, leaving you just to have a quick check-over to check you’re happy.